New Year, New Rules

At the beginning of this year and the new government, on January 3, 2019, Law 13,792/19 was sanctioned, which amends the Civil Code to reduce the quorum for removal from office of the managing partner, named in the articles of organisation and simplify the procedure for the exclusion of a partner, in limited companies composed of only two partners. The Law was sanctioned from PL 31/18 and entered into force on January 4, 2019.

With regard to the reduction in the quorum for removal of the managing partner named in the articles of organisation, the amendment seems to us to be appropriate, since the majority must have the power to dictate the company rules and remove a partner from the management who does not have its approval, except if established differently in the articles of organisation. The change is constructive, furthermore, for coexistence and preserving companies in the face of corporate conflicts.

For those who experienced much missed Decree No. 3,708/19, the changes introduced by the Civil Code of 2002 brought about greater complexity and formalism for limited companies, often incompatible with the simplicity of the businesses that are used in this type of company. Thus, it would be opportune for the legislative change to be able also to simplify the systematics and quorums for the election and removal of managing partners and non-partners, among others.

With regard to the second proposed change, doing away with convening a special meeting to exclude a partner in limited companies composed of only two partners, it can be understood that a company with minimum organisation should not observe so many formalities. However, it is necessary to interpret the extent of this change with some caution, in accordance with the particular case.

The exception contained only in the first part of the sole paragraph of Article 1,085 of the Civil Code brings more doubts than certainties. Does the legislative amendment intend to eliminate (i) the formality, term and costs of convening a special meeting; or (ii) holding a meeting for the exclusion of a partner in companies with only two partners? The unmistaken awareness, in a timely manner, of the partner to be excluded would be relevant, so that he/she could also exercise his/her right to a defence, consistent with the governing principles of Brazilian law, even if the majority decision prevails. Otherwise, it is very likely that partners thus excluded will always seek Judicial review.

The change in such a controversial and sensitive issue – through a simple exception – leaves room for different interpretations, especially with regard to the procedure to be observed administratively. Thus, the application of exclusion in this manner must be carried out with some prudence, awaiting the understanding of the Brazilian courts.

Published on: January 04, 2019 | Issuance: 3 | Section: 1 | Page: 2

Body: Legislative Acts

LAW Nº. 13,792, of january 3, 2019

Changes provisions of Law No. 10,406, of January 10, 2002 (Civil Code), to modify the quorum for decisions in limited companies.

T H E P R E S I D E N T O F T H E R E P U B L I C

I make it known that the National Congress decrees and I sanction the following Law:

Article 1 This Law modifies the quorum for decisions in limited liability companies in the cases mentioned.

Article 2 § 1 of Article 1,063 of Law No. 10,406, of January 10, 2002 (Civil Code), enters into force with the following wording:

“Article 1,063. ……………………………………………………………………………………………….

§ 1 In the case of a partner appointed as managing partner in the articles of organisation, his/her removal is only carried out by the approval of holders of quotas corresponding to more than half of the capital stock, unless there are contractual provisions to the contrary.

…………………………………………………………………………………………………………………” (New Wording)

Article 3 The heading of Article 1,076 of Law No. 10,406, of January 10, 2002 (Civil Code), enters into force with the following wording:

“Article 1,076. Except for the provisions of Article 1,061, decisions of partners will be taken:

………………………………………………………………………………………………………………….” (New Wording)

Article 4 The sole paragraph of Article 1,085 of Law No. 10,406, of January 10, 2002 (Civil Code), enters into force with the following wording:

“Article 1,085. ……………………………………………………………………………………………….

Sole paragraph. Except for cases in which there are only two partners in a company, the exclusion of a partner may only be decided at a meeting especially convened for this purpose, with the accused being made aware in a timely manner to allow his/her presence and the exercise of the right to a defence.” (New Wording)

Article 5 This Law enters into force on the date it is published.

Brasília, January 3, 2019; 198th of Independence and 131st of the Republic.

JAIR MESSIAS BOLSONARO

SÉRGIO MORO

PAULO GUEDES

ANDRÉ LUIZ DE ALMEIDA MENDONÇA